Wage cuts — the ultimate atomistic fallacy The world has been slow to realize that we are living this year in the shadow of one of the greatest economic catastrophes of modern history. But now that the man in the street has become aware of what is happening, he, not knowing the why and wherefore, is as full to-day of what may prove excessive fears as, previously, when the trouble was first coming on, he was lacking in what would have been a reasonable...
Read More »On the importance of chasing miracles (personal)
On the importance of chasing miracles (personal) [embedded content] One of my absolute favourites. A gem of a movie. This one is for my son David, who almost by miracle survived the St Petersburg metro bombing yesterday. Advertisements
Read More »Wren-Lewis and austerity dodging
Wren-Lewis and austerity dodging In the ongoing austerity debate, Brad DeLong told Simon Wren-Lewis the other day to stop dodging and instead squarely face the fact that most mainstream economists who were heard in the public sphere were not against austerity, but rather split, with, if anything, louder and larger voices on the pro-austerity side. But Wren-Lewis still thinks neither people outside economics, nor economists, know how representative of the...
Read More »Lowering wages is not the solution
Lowering wages is not the solution In connection with being awarded The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel a couple of years ago, Thomas Sargent, in an interview with Swedish Television, declared that workers ought to be prepared for having low unemployment compensations in order to get the right incentives to search for jobs. This old mercantilist idea has very little support in research, since it has turned out to be...
Read More »Verdoorn’s law
In the standard mainstream economic analysis a demand expansion may very well raise measured productivity in the short run. But in the long run, expansionary demand policy measures cannot lead to sustained higher productivity and output levels. In some non-standard heterodox analyses, however, labour productivity growth is often described as a function of output growth. The rate of technical progress varies directly with the rate of growth according to Verdoorn’s law. Growth...
Read More »The limits of formal models
The limits of formal models The practical limits of formal models become especially apparent when attempting to integrate diverse information sources. Neither statistics nor medical science begins to capture the uncertainty attendant in this process, and in fact both encourage pernicious overconfidence by failing to make adequate allowance for unmodeled uncertainty sources. Instead of emphasizing the uncertainties attending field research, statistics and...
Read More »Master class
[embedded content] Elzbieta Towarnicka — with a totally unbelievable and absolutely fabulous voice. This is as good as it gets in the world of music. Advertisements
Read More »Prayer
[embedded content] This one is for all you, brothers and sisters, fighting oppression, struggling to survive, and risking your lives on your long walk to freedom. May God be with you. Advertisements
Read More »Min värld är fattig och död när barnasinnet berövats sin glöd
Min värld är fattig och död när barnasinnet berövats sin glöd Poesi och musik i vacker förening. Hansson de Wolfe United — ett fenomen i svensk popmusik utan motstycke. [embedded content][embedded content] Advertisements
Read More »Probability and economics
Modern mainstream (neoclassical) economics relies to a large degree on the notion of probability. To at all be amenable to applied economic analysis, economic observations allegedly have to be conceived as random events that are analyzable within a probabilistic framework. But is it really necessary to model the economic system as a system where randomness can only be analyzed and understood when based on an a priori notion of probability? When attempting to convince us of the...
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